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Category — Cross State Rule (EPA)

Unlearned Cap-and-Trade Lessons: EPA’s Problematic Cross-State Air Pollution Rule

On August 8, 2011, EPA published the Cross State Air Pollution Rule (CSAPR) in response to the court decision, North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), which vacated the Clean Air Interstate Rule. But instead of building on the lessons learned of successful programs, the rule makes so many changes to the cap-and-trade provisions that pollution reduction is in real doubt. Moreover the changes are so extensive that reliability impacts are possible.

CSAPR Rule

The rule requires 23 states to reduce annual SO2 and NOx emissions to help downwind areas attain particulate matter and ozone ambient air quality standards. This rule replaces EPA’s 2005 Clean Air Interstate Rule with three different cap programs.

A 2012 annual SO2 cap is set at 3,385,929 tons as compared to the recent (average 2008 to 2010) emissions of 5,216,931 tons. There is a 2012 annual NOx cap set at 1,245,869 tons compared to the recent emissions of 1,595,756 tons.

Finally, EPA established a 2012 Ozone Season NOx cap 495,314 tons compared to recent emissions of 566,363 tons. In all three programs there is another round of reductions in 2014.

Cap-and-Trade Problems

According to EPA, Cap and Trade is a market-based policy tool for protecting human health and the environment. A cap-and-trade program first sets an aggressive cap, or maximum limit, on emissions. Sources covered by the program then receive authorizations to emit in the form of emissions allowances, with the total amount of allowances limited by the cap. Each source can design its own compliance strategy to meet the overall reduction requirement, including sale or purchase of allowances, installation of pollution controls, implementation of efficiency measures, among other options.

Individual control requirements are not specified under a cap-and-trade program, but each emissions source must surrender allowances equal to its actual emissions in order to comply. Sources must also completely and accurately measure and report all emissions in a timely manner to guarantee that the overall cap is achieved.

Unfortunately, there are significant problems with CSAPR cap and trade. [Read more →]

September 22, 2011   2 Comments